TMI Blog2015 (1) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... rseas service provider to carry out these activities at buyer's premises at USA. As seen from the SCN, and the adjudication order the only ground on which the service tax credit was denied is that services were rendered outside the place of removal of goods from the factory premises which is in the nature of post-removal activities. Respondents have availed the services of overseas service provider to carry out quality control activity on Rear Axle Housings at buyer's premises. Appellant being 100% EOU, they have secured orders for fulfillment of export obligation. Being manufacturer of Rear Axles Housing (Motor Vehicle parts), as per the drawing, design and specifications of the overseas buyer, the respondents have to ensure that the activities viz. removal of rust, deburring, quality control checking are done at buyer's premises. If the respondent do not satisfy the quality of the parts manufactured by them, and if it results in rejection, certainly, it will be a loss to his business. Therefore, these activities are related to quality control and in relation to the business of the respondent. Therefore, I am of the considered view that the said services availed by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reverse charge mechanism, they are not eligible to avail credit. As per the definition of input services the activity carried out by the overseas company do not qualify as input services and has no nexus to the manufacture of final product. The service is rendered outside the place of removal. He submits that clause (ii) of definition of input service' of Rule 2(l) of CCR has four categories (i) it should be related to setting up, modernization, renovation or repairs of a factory, premises of provider of output service (ii) the input service should have been directly used in or in relation to the manufacture of final product and clearance of final product upto the place of removal (iii) activities relating to business, such as advertisements or sales promotion, market research, such as accounting, auditing, financing, recruitment, and quality control etc. and (iv) inward transportation of inputs or capital goods and outward transportation upto the place of removal. All the above four categories should be directly relating to manufacture of goods. He further submits that the activity carried out at the buyer's premises at USA is only cleaning the rust and it is not to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the adjudication order and allowed their appeal. The Ld. Advocate relied on the following citation :- (1) CCE Vs Nilkamal Crates Bins. 2010 (19)STR 431 (Tri.-Ahmd.) 5. Ld. AR countered the learned advocate's submission that Tribunal's decision relied by Single Member Bench of Ahmedabad is not applicable in view of Gujarat High Court decision in the case of Cadila Healthcare Ltd. (supra). He also submits that since the respondents are not aggrieved by the order their cross objections is not maintainable. To this learned advocate submits same may be treated as written defence to the Revenue's appeal. Ld. Advocate countered that Cadila Healthcare case dealt by Gujarat High Court is not applicable to their case as Cadila Health Care case relates to commission paid and not related to sales promotion. 6. Ld. Advocate undertook to file copy of agreement between the buyer and the service provider and additional submissions. 7. I have carefully considered the submissions and the grounds of appeal and the defence submissions by the respondent and carefully gone through the records. The short issue in the Revenue appeal relates to whether servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services rendered by them as stated supra are not eligible for availing cenvat credit as input service. Therefore it appears that the cenvat credit availed by the assessee is inadmissible and requires to be expunged. 8. Whereas, I find from the grounds of appeal at para S.No.7 to 19 the Revenue has brought out new grounds. As seen from the copy of the purchase order and extract of Supplier Quality Development Manual, the respondents secured orders for supply of Housing S110, S130, 19060S, S140 Axle and also Axle Housing of various other part numbers for Dana Commercial Vehicle Mfg. The respondent has to manufacture and supply the Motor Vehicle parts as per the ISO/TS 16949 or ISO 9001 standard and adhere to customer's specific requirements and the product should conform to all engineering standards. The activities carried out by M/s.Product Action International, USA at the DANA Commercial Vehicle, USA warehouse surely related to meeting the specification and quality control of the axle housings. These activities certainly qualify to be considered under quality control and in relation to business. 9. Revenue has mainly contended that the service rendered by overseas a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the present case as the said case relates to denial of credit of service tax availed on the construction of residential colony which is a welfare activity. The same is not applicable to the present case. In the case of CCE Vs Gujarat Heavy Chemicals Ltd. (supra) wherein also the High Court has denied credit on security service provided to the residential quarters of the manufacturer which is voluntary and welfare activity and not in relation to the manufacture whereas the service activity carried out by the service provider is not a welfare activity or voluntary activity but it is related to the quality control of the finished goods sold to the overseas buyer. The Tribunal in the case of CCE Vs Nilkamal Crates Bins. (supra) has dismissed the Revenue's appeal by relying the Hon'ble Bombay High Court in the case of Coca Cola India Pvt. Ltd. Vs Commissioner - 2009 (15) STR 657 (Bom.). The relevant paragraphs of the above Tribunal's decision is reproduced as under :- 4. I have considered the submissions made by both sides. In this case, department is in appeal on the ground that the respondent is not eligible for the benefit of credit of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products and transportation of final products upto the place of removal. This would, follow from the observation of the Supreme Court in Kerala State Co-operative Marketing Federation Ltd. and. Ors. v. Commissioner of Income tax - 1998 (5) SCC 48, which is as under : 7. We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sector in the economic life of the country and in pursuance of the declared policy of the Government, the correct way of reading the different heads of exemption enumerated, in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a co-operative society is exempt. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. 5. In the said decision of Hon ble High Court of Mumbai, the conclusion that emerges is the legislative intent in respect of inputs for manufacture and input service in case of manufacture are to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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